Jake Freeman, an applied math and economics major at the University of Southern California, made about $110 million in a well-timed sale of shares in meme stock Bed Bath & Beyond after the 20-year-old bought low in July, and then sold high a month later.
Freeman bought close to 5 million shares in Bed Bath & Beyond (BBBY) in July for less than $5.50 per share, giving him a 6 percent position in the company after its stock price plummeted following poor earnings and the ousting of its CEO, Financial Times reported. The acquisition was made via Freeman Capital Management, a fund registered in Sheridan, Wyoming, according to regulatory filings.
BBBY skyrocketed 67 percent in a day on Tuesday, July 16, trading for as much as $28.04 after being worth $8.88 a week earlier. It has since dropped, trading at $16.61 as of this writing.
Thanks in part to an army of traders on the r/wallstreetbets Reddit board, Bed Bath & Beyond (BBBY) is one of a handful of meme stocks that have become popular since early 2021, causing consternation on Wall Street. However, BBBY didn’t get as much attention as blowing up stocks of video game retailer GameStop and movie chain AMC.
Reddit’s new favorite meme stock did what meme stocks do: spike “to an unsettling degree,” Mashable reported. Interest from retail investors is credited with raising the BBBY share price. They were attracted by the stock’s small free float and a significant number of short sellers betting the share price would fall.
“Those two characteristics tend to draw interest from retail investors frequenting Reddit forums. It means they can try to engineer a ‘short squeeze’ by driving the share price higher and forcing professional investors to unwind their bearish positions, which only propels the stock even higher,” wrote Antoine Gara and Madison Darbyshire.
Freeman paid $25 million for his initial BBBY stake, which he said was mostly raised from friends and family, FT reported. This makes his story “a lot less impressive,” tweeted Dare Obasanjo, a software engineer at Microsoft.
Freeman has invested for years with his uncle, Dr. Scott Freeman, a former pharmaceutical executive. Together they built an activist stake in a publicly traded pharmaceutical company called Mind Medicine, FT reported. Freeman also said he had interned for years at New Jersey hedge fund Volaris Capital. When he was 16, Freeman and Volaris founder Vivek Kapoor, a former Credit Suisse executive, published a paper titled “Irreducible Risks of Hedging a Bond with a Default Swap”.
The 20-year-old’s success elicited a flurry of Twitter responses ranging from admiration to skepticism. Here are some of the responses: